Annatar

At the end of the First Age, the Valar conquered Morgoth and took him back across the Sea, ultimately to eject him from the World altogether. Morgoth's great lieutenant Sauron, however, escaped the War of Wrath and hid himself in Middle-earth. As the centuries passed, he came to think that the Valar had forgotten Middle-earth after their victory, and to formulate plans to establish his own dominion there.

After a thousand years, Sauron had taken control of a land of his own, which became known as Mordor, and had begun to bring the peoples of Middle-earth under his power. He found it a simple matter to sway Men to his allegiance, but the Elves proved more difficult to influence, and so Sauron devised other means to place them under his control.

Sauron's scheme to entrap the Elves was one of subtle persuasion. He took on the angelic appearance of an emissary of the Valar and gave himself new names. Among these were Artano the high smith and Aulendil the servant of Aulë, but the best known of these guises to history was Annatar, the Lord of Gifts. In this form he went to the Elves and offered them his aid in their works, but even as Annatar most of the leaders of the Elves were suspicious of him. He was rebuffed by Gil-galad, Elrond and Galadriel, but the Jewel-smiths of Eregion were less suspicious, and their leader Celebrimbor accepted his offers of knowledge and help.1

In the distant past, Sauron had truly been a Maia of Aulë's people, and so he had great knowledge of the making of powerful items. As Annatar he remained in Eregion for some three centuries, from about II 1200 to II 1500, and in that time he gave the already skilled Jewel-smiths even greater understanding of their crafts. Eventually they began the making of true Rings of Power, and as they did so, Annatar chose to depart from Eregion and leave them to their work. Over the next ninety years, Celebrimbor and his smiths made many more Rings, culminating in their greatest achievements, the Three Rings.

Wielding his new Ruling Ring, Sauron discovered that his plan to entrap the Elves had failed. The Three Rings had been constructed by Celebrimbor alone, untouched by Annatar, and through those RingsSauron's true purpose was revealed. Having failed to enslave the Elves through secrecy and guile, Sauron abandoned his guise as Annatar, and instead went to open war against Celebrimbor and all others those who would stand against him.

Notes

1

The politics of Annatar's subversion of the Jewel-smiths are unclear. The Lord of the Rings gives us very little detail, simply stating that the smiths were won over by Annatar and accepted his help. Other sources (The History of Galadriel and Celeborn in Unfinished Tales) describe a far more complex situation. According to this version, Galadriel was the ruler of Eregion at the time, and she rejected Annatar. He therefore worked with the Gwaith-i-Mìrdain in secret and eventually urged the Jewel-smiths into open revolt, driving out Galadriel and enabling the completion of the Rings of Power.

This is only one of several alternative histories of Galadriel, and it's far from certain whether Tolkien intended this as part of the 'true' history of Annatar in Eregion. It does seem curious that Galadriel would be suspicious of this strange visitor to her land, and yet allow him to remain there (though this is perhaps not entirely impossible, and we're told that Sauron worked at first to placate Galadriel, seeing her as the most dangerous of his foes).